Karvy case: SAT refuses relief to banks

live bse live nse live Volume Todays L/H More × The Securities Appellate Tribunal (SAT) on December 4 refused immediate relief to banks and Bajaj Finance in the Karvy Stock Broking case. ICICI Bank, IndusInd Bank and HDFC Bank had moved SAT saying that many of these securities had been used to borrow money from them and had pleaded with the tribunal to either get the securities back to them or put them in an escrow account to protect their funds. The securities held by over 83,000 clients were given back to them on December 2 after SEBI asked NSDL to do so, forcing Bajaj Finance to move SAT and secure an interim relief on further transfers. Banks argued that pledged shares cannot be transferred without the consent of banks. However, SAT directed SEBI to hear plea of banks on December 6 and pass an order by December 12. SAT had earlier directed SEBI to hear Bajaj Finance's plea and pass an order by December 10. Bajaj Finance is the second-highest lender to Karvy on shares. SAT has already directed NSDL to not transfer further shares from Karvy account to clients. "Bajaj Finance had given loan of worth of Rs 1000000000 after 20th June circular of segeration of client and Properitory account. and this circular clearly says that financial institutions can't give loan on client pledge shares categorically. SAT does not have power of invocation which has high courts," a source told Moneycontrol. The lawyer representing banks argued that if court does not freeze securities, then it would be difficult to recover money. He even said the money can be put in an escrow account but SAT has now put the ball in SEBI's court. "SEBI may not give favourable order to banks and Bajaj Finance. Banks and Bajaj Finance did not do proper due-diligence before giving loans against shares to Karvy even after the June 20 circular. The parliamentary mandate to SEBI is to protect interests of investors," a source told Moneycontrol.